Special Report: Building The Case

FBI Agents Vicki Humphreys (left), Brian Nichilo and Kathleen T. McAfee. Nichilo, an accountant, helped the team created databases to track the nonprofit group sitting on $17 million that Fumo had squeezed from Peco Energy.
FBI Agents Vicki Humphreys (left), Brian Nichilo and Kathleen T. McAfee. Nichilo, an accountant, helped the team created databases to track the nonprofit group sitting on $17 million that Fumo had squeezed from Peco Energy.

How the feds got Fumo

Posted: March 22, 2009

It was early in the investigation, but already the FBI was getting on Vince Fumo's nerves.

In a typically blunt e-mail, he wrote to a top aide in 2004 that a delicate part of his anatomy had just been "busted by my 2 friendly female FBI agents."

Then he cursed them.

His aide replied: "I do not like those people. Long live the realm of Fumo-world! :-)"

Now former State Sen. Fumo stands convicted of scores of counts of corruption in a $4 million fraud, his aide has lost his job, and Fumo-world is a smoking ruin.

Relentlessly civil, but also downright relentless, FBI Agents Vicki Humphreys and Kathleen T. McAfee scrutinized Home Depot receipts and analyzed American Express card bills, tallied up toll slips and tracked down yacht captains, all to build a case that everyone told them they could never construct.

They were joined by Assistant U.S. Attorneys John J. Pease and Robert A. Zauzmer. It was Pease who took Mensa member Fumo apart on cross-examination. Zauzmer was the unflappable strategist whose methodically searing closing argument sealed Fumo's fate.

While Monday's verdict turned out to be a resounding triumph for the government, McAfee, 54, and Humphreys, 40, say the case looks like a slam dunk only in retrospect.

"No one cooperated with us easily," McAfee said. "Not one person."

Over and over, she said, witnesses told them, "You'll never get him."

Said Humphreys: "This was an uphill climb."

In an interview last week, Pease, 41, and Zauzmer, 48, said that during the investigation they had to overcome an ongoing cover-up and a fierce counterattack from one of Philadelphia's most formidable defense lawyers, Richard A. Sprague.

The overarching problem, they all agreed, was that Fumo's confederates were reluctant to turn against him out of fear, loyalty, or a simple desire to protect their sizable paychecks.

"It was a tough investigation because of the obstacles, the difficulty of piercing the Fumo inner circle," Pease said.

By the time they were done, the feds had marshaled as prosecution witnesses a wronged former Fumo girlfriend, his estranged son-in-law, his state-paid private eye, and his tax-evading political consultant.

In a final twist, Sprague, who had a falling-out with Fumo, also testified for the prosecution.

Much of this came together in a rush at the end. Before that, the FBI and prosecutors labored for years, not months, to build the case. The investigators knew that if they were going to take on one of the most powerful Democratic politicians in the state, the evidence had to be irrefutable.

For the investigators, it was an often tedious process of putting together a paper case - a chain of evidence based on invoices and checks, on e-mails and memos, until finally they had the makings of a sweeping federal indictment.

John Roberts, the head of the FBI's public-corruption squad in Philadelphia, said the agents' "tenacity, dedication and perseverance" had shaped a powerful case out of very difficult material.

It began in '03

The Fumo case began in early 2003 when the FBI began following what turned out to be a dead end: an allegation of misuse of investments by an obscure South Philadelphia civic-improvement organization. The entity was called Citizens' Alliance for Better Neighborhoods.

Contradicting complaints from Fumo that a Republican Justice Department had targeted him for partisan reasons, the agents say that at the time they had only a vague sense of Fumo's role.

In fact, the FBI file was opened under the name Citizens' Alliance, not Fumo.

"We really didn't have a clear focus on what we were looking at," Humphreys said last week.

While the investment-related lead did not pan out, Humphreys and McAfee were left very interested in Citizens' Alliance.

The pair, who had been FBI partners for years, targeting crooked plumbing inspectors and other municipal miscreants as members of the public-corruption unit, had come to realize that the nonprofit was sitting on a ton of money - $17 million. Fumo had squeezed the donation from Peco Energy.

Before long, the FBI team was unraveling the secret Peco deal, as well as similar pressure Fumo put on Verizon Communications.

Thanks to a tip, the agents also had learned about Fumo's free trips on luxury yachts owned by the Independence Seaport Museum, where he was a board member.

In the spring of 2004, the feds hit the maritime museum and Citizens' Alliance with subpoenas.

The agents ended up with box after box, jammed with a haphazard array of documents. The information was often incomplete and sketchy.

"As bare-bones as they were," Humphreys said, the Citizens' Alliance records started to reveal a strange pattern of spending.

Working backward from the receipts, they found an astonishing range of purchases for a nonprofit in South Philadelphia. There were thousands of purchases of tools, and lots of spending on incongruous goods, including hot dog rolls, tiki lamps, mosquito zappers, high-end Oreck vacuums.

Also strange: The items were bought in shopping sprees at the Jersey Shore. This was a distance from South Philadelphia but close to the homes of Fumo and Ruth Arnao, the executive director of the nonprofit. She was convicted last week alongside Fumo.

Early on, the agents inspected the Citizens' Alliance warehouse and saw only a few brooms and shovels. Where were all the tools?

Humphreys also focused on the hundreds of toll receipts - documentation submitted by Citizens' Alliance workers for reimbursement - that showed trip after trip to the Shore. This was strange, too.

Slowly, a picture started to come together, "but it was fragmented," McAfee recalled.

Joined by a third FBI agent, Brian Nichilo, 31, an accountant, the team created databases for all the expenditures of Citizens' Alliance, inputting thousands of purchases.

"We were working ridiculous hours," Humphreys said. They labored six days a week, often until midnight.

Early on, Humphreys and McAfee had learned that two of Fumo's Senate staffers wrote all the checks for Citizens' Alliance.

This helped put them on yet another investigative avenue: the allegation that Fumo defrauded the Senate by getting his employees to do all manner of non-legislative work, not just for the nonprofit, but also to help Fumo with personal and campaign work.

In a key break, the agents eventually enlisted the aid of Christian Marrone, Fumo's son-in-law.

Before he and his wife, Nicole, parted with the senator, Marrone had a foot in both worlds. He had worked as a special legislative assistant to Fumo and had been active in the nonprofit.

It was Marrone who told them about taking many trips with Fumo to Sam's Clubs and a Home Depot near the Shore.

Fumo, said Marrone, would always invite Arnao to go along.

Why?

"She had the card," Marrone told them - the Citizens' Alliance credit card.

In time, a nonprofit supervisor would sit down with Humphreys and painstakingly go over the FBI databases. He would confirm that thousands of the purchases had been for items never given to the charity's crews.

The toll receipts would help prove that the nonprofit's workers routinely drove to Fumo's properties in Margate and Ventnor to pick up his trash and, once, to unfurl his flag.

As they continued to pore over the records, the agents were struck by what wasn't there - e-mails.

In early 2005, Pease hit the nonprofit with a second subpoena, adding a letter to Fumo's defense team that explicitly demanding all e-mail.

When the FBI got hold of Arnao's computer as a result, FBI computer expert Justin Price analyzed its contents. He found something deeply disturbing: e-mails written after the second subpoena showing that the office was busy expunging Fumo's messages.

Aware now of an active cover-up, Humphreys and Pease worked a feverish 48 hours writing an application for a search warrant. They got a judge to sign it at 4:30 p.m. on a Friday, and the FBI arrived at the Senate office at 4:55 p.m.

As soon as the FBI set foot in the office, the agents found clear evidence of the campaign to obstruct justice: SecureClean, a deletion program, was running right in front of their eyes. Price immediately powered down the computer.

"The search warrant was a key moment," McAfee said last week.

In another breakthrough, Price recovered another "smoking gun" document, using technical wizardry to retrieve it even though it had been deleted.

In this 2004 e-mail, Fumo wrote that he was desperate to find out what the FBI was learning from Verizon. He ordered his political consultant, Howard Cain, to grill a friend, a Verizon lawyer, about what she knew.

Fumo's e-mail graphically showed why so many people around him were fearful of cooperating.

"FRIENDS are supposed to help FRIENDS!!! . . . You know how serious and almost life threatening this is . . . We will never forget," he wrote.

Soon, the agents were putting together what would become another part of the indictment - obstruction of justice.

They talked to other computer technicians who worked for Fumo. One tipped them that another Fumo computer expert, Leonard Luchko, had stockpiled Fumo "memory cards" at his Delaware County home.

The FBI raided Luchko's home at 7 a.m. one day in October 2005. The agents left with a crucial find: a memory card with thousands of pages of documents showing that Senate staffers took care of Fumo's personal and political finances.

Even as the evidence accumulated, the agents were not satisfied.

"We always wanted more," McAfee said. "It was such a slow process to finally build it."

By the spring, they persuaded private investigator Frank Wallace to talk. He was working for Fumo under a Senate contract and told them he also had spied on Fumo's girlfriends, his political enemies, even Fumo's son.

"It was building a wall, brick by brick," Humphreys said. "I can't say there was one moment when we were like, 'Wow, we have him.' "

It took six trips to the home of one ex-girlfriend, Dottie Egrie-Wilcox, but she finally agreed to talk and fill in more pieces of the puzzle.

Like Marrone, she helped the FBI assemble caches of e-mails that had gone undeleted in the cover-up.

For another thing, she told them that Fumo was a shopaholic who loved tools and was known to stay up all night doing catalog shopping. He liked to have many copies of the same items, from tools to vacuum cleaners to clothing, at all of his homes.

That helped explain the array of multiple purchases of everything from tools to books to khaki slacks - not to mention the cargo shorts in Fumo's size and the Encyclopedia of Country Living, bought about the time Fumo was purchasing his 100-acre farm.

Persuasion

As the FBI agents dug, prosecutors Pease and Zauzmer had their own challenge: how to shape the complex material and persuade a jury to convict.

Like the FBI agents, the two prosecutors had been at this for a while. Zauzmer had been part of the team that won the corruption conviction of former Philadelphia Treasurer Corey Kemp.

Pease turned away a series of legal attacks on the probe, including a move to bar investigators access to Senate computers on the ground that the institution's PCs were untouchable.

It didn't help that many of the key financial records in the case were held by First Penn Bank, which Fumo chaired.

"I've never had more trouble getting records from a bank," said Pease, a veteran of tax investigations.

As the case proceeded, Pease and Zauzmer also had to make a series of difficult judgment calls about whom to immunize from prosecution. They ended up obtaining immunity for about a dozen people, including six of Fumo's aides and his private eye, Wallace.

Zauzmer said these choices had been crucial in cracking what he called the Fumo "monolith."

In the months right before Fumo was charged, Zauzmer - or "Bobby Z," as the FBI agents called him - shaped and edited the ungainly indictment. It ended up being a 267-page monster, but a compelling narrative in which Fumo's obsession with spending OPM - "other people's money" - became the glue pulling together his scams in so many diverse arenas.

After years of digging, the case finally went to trial last fall.

The indictment charged Fumo and Arnao with defrauding Citizens' Alliance and obstruction of justice. Fumo alone was charged with defrauding the Senate and Independence Seaport Museum. In one count, the indictment said Fumo had given Arnao's husband a "no-work" contract.

Backed into a corner by the FBI's digging, the defense made a stunning admission right out of the box.

For years, Fumo had denied that he had received anything from the nonprofit. Now his defense team admitted, in the opening words of lawyer Edwin J. Jacobs Jr., that the senator had received "gifts, favors, comps, perks, compensation - you can call it about anything."

"We were really surprised," Zauzmer recalled.

After laboring for so many months to prove that Fumo really controlled the nonprofit and had siphoned off its money, Pease and Zauzmer had to swiftly change their approach to discredit Fumo's latest defense strategy: that he had taken stuff because he was entitled to it.

As Pease put it, "We now had a target to focus on."

By day, Pease and Zauzmer clashed with Jacobs and Fumo's lead lawyer, Dennis J. Cogan. By night they retooled their trial strategy to address Fumo's evolving defenses.

Ultimately, the prosecutors left Fumo's argument in shreds.

They showed that Fumo had failed to report his "compensation" on his personal tax returns or on his public-official income-disclosure forms.

As Zauzmer later told the jury, it all smelled like a rationalization cooked up well after the fact.

With his back against the wall, Fumo had to take the stand.

He ran smack into Pease. Under Pease's grilling, Fumo made a series of damaging admissions. Most telling, he acknowledged that he had stepped up computer security after The Inquirer broke the news that he was under FBI investigation.

Pease said last week that one of his key goals with regard to Fumo had been simple: "To let him be himself."

As it happened, Fumo did put his personality on vivid display, a display jurors said they had found unappetizing.

In a remark for which his lawyer later apologized to the jury, Fumo told Pease that some of the accusations against him were no more serious than spitting on the sidewalk.

He also told Pease that his only obligation as senator was to go to Harrisburg and vote.

"That sunk him," the jury's forewoman said later.

"How dare he?" added another juror.

Zauzmer's task was to organize the case to help the jury make sense of it all - the luxury-yacht cruises, the "ghost" consultants, the Senate-paid maid, the shopping sprees, the charity-financed political polls, the computer "wipes," and the encrypted e-mails.

Zauzmer said he and Pease had worked hard to impose clarity on the material, coordinating Pease's opening address with Zauzmer's closing to drive their points home.

"The word for this case is not complex," Zauzmer said. "It's voluminous."

Indeed, Zauzmer proved extraordinarily persuasive in his marathon closing, bluntly ripping Fumo as a "glutton," someone "always looking out for Number One."

In the interview, Zauzmer downplayed his rhetorical skills.

"There's nothing complex about Fumo saying, 'I want a free trip on a yacht and a French chef to serve me canapes,' " Zauzmer said.

The probe goes on

While Fumo and Arnao await their sentences, Zauzmer is back writing appellate briefs. Pease now heads the health-care fraud unit.

McAfee retired from the FBI last spring and is now the city's first deputy inspector general, rooting out wrongdoing for Mayor Nutter.

As for Humphreys, she's still on the corruption squad. On Thursday, moments after the close of a post-conviction hearing for Fumo and Arnao, she strode across the courtroom to hand an envelope to Arnao's husband, Mitchell Rubin.

Rubin, chairman of the Pennsylvania Turnpike Commission, opened it and sat back, stunned. It was a "target letter," warning him he might be indicted.

The Fumo investigation continues.


Contact staff writer Emilie Lounsberry at 215-854-4828 or elounsberry@phillynews.com.

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